Look at it from a logistics and accounting point of view. All the mentioned lessors...glasses, hair salons, hearing aids, fast food, etc...are in small, separate spaces on the edges of the Walmart central floor. Any contracted space to something like JoAnn's would also be put on the edge and therefore in a very limited, individually lockable, space.
Walmart isn't going to rent out space in the middle of their retail area, only on the edges. It's too much of an accounting nightmare to do it any other way (and Walmart is all about the accounting). They want them in separate little boxes, with separate space costs, security, cleaning, staffing, hours, etc.
Would JoAnn's agree to set up in such limited edge space? Or, if given the option to lease on the central floor, would they agree to staff 'their' area for ALL of Walmart's open hours (24/7 here)? Walmart is certainly not going to staff it, or secure it, or clean it, etc. It just doesn't make sense from a practical standpoint for either company.
The JoAnn's here is physically expanding, broke through a wall into the store next door, and turning into a superstore. The expansion is for art/craft supplies, not fabric. They're certainly not going to 'dilute' their market by spreading out to Walmart.